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Articles 1 - 10 of 10
Full-Text Articles in Securities Law
How Deregulating Derivatives Led To Disaster, And Why Re-Regulating Them Can Prevent Another, Lynn A. Stout
How Deregulating Derivatives Led To Disaster, And Why Re-Regulating Them Can Prevent Another, Lynn A. Stout
Lynn A. Stout
When credit markets froze up in the fall of 2008, many economists pronounced the crisis both inexplicable and unforeseeable. That’s because they were economists, not lawyers. Lawyers who specialize in financial regulation, and especially the small cadre who specialize in derivatives regulation, understood what went wrong. (Some even predicted it.) That’s because the roots of the catastrophe lay not in changes in the markets, but changes in the law. Perhaps the most important of those changes was the U.S. Congress’s decision to deregulate financial derivatives with the Commodity Futures Modernization Act (CFMA) of 2000. Prior to 2000, off-exchange derivatives contracts …
The Shareholder Value Myth, Lynn Stout
Derivatives And The Legal Origin Of The 2008 Credit Crisis, Lynn A. Stout
Derivatives And The Legal Origin Of The 2008 Credit Crisis, Lynn A. Stout
Lynn A. Stout
Experts still debate what caused the credit crisis of 2008. This Article argues that dubious honor belongs, first and foremost, to a little-known statute called the Commodities Futures Modernization Act of 2000 (CFMA). Put simply, the credit crisis was not primarily due to changes in the markets; it was due to changes in the law. In particular, the crisis was the direct and foreseeable (and in fact foreseen by the author and others) consequence of the CFMA’s sudden and wholesale removal of centuries-old legal constraints on speculative trading in over-the-counter (OTC) derivatives. Derivative contracts are probabilistic bets on future events. …
On The Rise Of Shareholder Primacy, Signs Of Its Fall, And The Return Of Managerialism (In The Closet), Lynn Stout
On The Rise Of Shareholder Primacy, Signs Of Its Fall, And The Return Of Managerialism (In The Closet), Lynn Stout
Lynn A. Stout
In their 1932 opus "The Modern Corporation and Public Property," Adolf Berle and Gardiner Means famously documented the evolution of a new economic entity—the public corporation. What made the public corporation “public,” of course, was that it had thousands or even hundreds of thousands of shareholders, none of whom owned more than a small fraction of outstanding shares. As a result, the public firm’s shareholders had little individual incentive to pay close attention to what was going on inside the firm, or even to vote. Dispersed shareholders were rationally apathetic. If they voted at all, they usually voted to approve …
Uncertainty, Dangerous Optimism, And Speculation: An Inquiry Into Some Limits Of Democratic Governance, Lynn A. Stout
Uncertainty, Dangerous Optimism, And Speculation: An Inquiry Into Some Limits Of Democratic Governance, Lynn A. Stout
Lynn A. Stout
People are often optimistic. Nearly fifty percent of marriages end in divorce, but one survey found that 100 percent of individuals planning to get married believed they would never get divorced. Most people think they drive better than the average driver, and at one university, ninety-four percent of professors placed themselves in the top fifty percent in terms of teaching skills. We often seem to think we are like the youth of Garrison Keillor’s fictional hometown Lake Wobegon, where “all the children are above average.” This is not always a bad thing. Optimism can be advantageous. Without optimism, Columbus might …
Are Stock Markets Costly Casinos? Disagreement, Market Failure, And Securities Regulation, Lynn Stout
Are Stock Markets Costly Casinos? Disagreement, Market Failure, And Securities Regulation, Lynn Stout
Lynn A. Stout
No abstract provided.
Regulate Otc Derivatives By Deregulating Them, Lynn A. Stout
Regulate Otc Derivatives By Deregulating Them, Lynn A. Stout
Lynn A. Stout
When credit markets froze up in the fall of 2008, many economists pronounced the crisis inexplicable and unforeseeable. Lawyers who specialize in financial regulation, and especially the small cadre who specialize in derivatives regulation, knew better.That's because the roots of the catastrophe lay not in changes in the markets, but changes in the law. In particular, the credit crisis can be traced to Congress's 2000 passage of the Commodity Futures Modernization Act, which radically altered the traditional legal approach to financial derivatives. This shift in the legal treatment of financial derivatives has brought the banking system to its knees. The …
The Investor Confidence Game, Lynn A. Stout
The Investor Confidence Game, Lynn A. Stout
Lynn A. Stout
Academic discussions of securities policy often assume that investors are hyperrational and distrustful actors who do not need the protections of the securities laws to avoid being defrauded. The time has come to recognize the limitations of this assumption and to consider as well the possibility and implications of investor trust. Experienced policymakers and businesspeople (and certainly experienced con artists) have long known that trust is a potent force in explaining and manipulating investor behavior. They are right. They are right to believe that investor confidence-meaning investor trust-is important to the market. They are right to think that trust has …
Agreeing To Disagree Over Excessive Trading, Lynn A. Stout
Agreeing To Disagree Over Excessive Trading, Lynn A. Stout
Lynn A. Stout
No abstract provided.
Are Takeover Premiums Really Premiums? Market Price, Fair Value, And Corporate Law, Lynn Stout
Are Takeover Premiums Really Premiums? Market Price, Fair Value, And Corporate Law, Lynn Stout
Lynn A. Stout
No abstract provided.